CNP Assesses Cyprus Crisis Impact on Laiki Insurance Unit

March 28 (Bloomberg) -- CNP Assurances SA, France’s largest
life insurer, is assessing the impact of the Cypriot crisis on
its joint venture with Cyprus Popular Bank Pcl, the lender that
will be dismantled as part of the island’s bailout.

The restructuring of the banking system and the Cypriot
economic crisis will have an impact that can’t be evaluated as
of today, a CNP official said by telephone. The company is
analyzing the consequences of the accords between the Eurogroup
and the Cypriot authorities, he said.

With the European Central Bank threatening to cut off
emergency financing for Cyprus’s tottering banks, Cypriot
leaders agreed March 25 to shut Cyprus Popular, known as Laiki,
the country’s second-largest lender, as part of a 10 billion-euro ($12.8 billion) European-led bailout.

“There might be losses on goodwill” assets that CNP has
on its Cypriot business, said Nicolas Jacob, a Paris-based
analyst at Oddo & Cie. with a neutral rating on the stock.
Still, “this activity is microscopic on CNP’s scale,” he said.

Goodwill Assets

CNP’s venture with Cyprus Popular had a value of 170
million euros on the French insurer’s books at the end of
December, including about 80 million euros of goodwill, the
official said. The Cypriot unit, called CNP Laiki Insurance
Holdings, has a Solvency I ratio, a measure of its ability to
absorb losses, above 300 percent and 93 percent of its business
is with resident Cypriots, the official said.

CNP Assurances, which last year wrote down the value of its
Italian joint venture with UniCredit SpA because of the
recession’s impact on the local insurance market, has kept
goodwill assets at its Cypriot business stable, according to its
website.

Goodwill is an accounting convention that represents the
amount paid for an acquisition over and above the fair value of
its net assets.

Cyprus last year was CNP’s fourth-largest market outside of
France with 2012 annual revenue of 176.9 million euros in the
Mediterranean island, down from 210.4 million euros a year
earlier. CNP last year had total revenue of 26.5 billion euros.

Growth Plans

CNP, seeking growth opportunities after Cyprus joined the
euro in 2008, spent 145 million euros to acquire a controlling
stake in the insurance units of Laiki, then known as Marfin
Popular. The Paris-based firm’s venture with Laiki was part of a
plan to reach a 5 percent market share in the Greek insurance
market and expand in countries such as Ukraine and Romania.

Laiki Cyprialife, CNP’s Cypriot life-insurance business,
commanded a 29 percent market share on the island in 2011, while
Laiki Insurance, the property-and-casualty arm of CNP’s
partnership with the Cypriot bank, had a 15 percent share, the
country’s largest, according to data from the Insurance
Association of Cyprus. Both units are based in Nicosia.

CNP’s Cypriot business has about 50,000 life-insurance
contracts, including 260 contracts with holdings of more than
30,000 euros and nine with holdings exceeding 100,000 euros, the
official said.